Many people wonder how to start a new business. The truth is, it’s not as complicated as you may think. All it takes is some hard work, and getting the licenses for the business. Then, you’re ready to get started. In this series, I’m going to show you how to start a new business, based on my experience..
Why Did I Open Compass Commercial?
Before opening Compass, I worked for a large and exclusively tenant-focused rep firm in my area. Like a lot of people who decide to open their own firm, I left because I didn’t feel as if I was being treated fairly. Our management had changed, and the new manager didn’t treat us as members of a professional organization. I was, once again, the only woman working there in a professional capacity. The “boys” would meet every morning to discuss work; then, they’d spend the afternoon throwing a football over my head while I worked.
As is common among brokerage firms, we had assigned territories, and mine was Troy, where I lived. The agreement was that any projects that came in from the corporate office would be assigned to the person responsible for the territory in which they belonged.
While making copies one afternoon, I found referral paperwork in the copy machine. To my surprise, a referral had come into my territory, and it had been given to one of the “boys.” When I inquired as to why it didn’t come to me, the response was more than a little frustrating. Apparently, I made a lot of money and the football players didn’t, so one of them got the referral even though it should have come to me. Then, corporate wasn’t interested in addressing the situation, at which point I figured there was no reason to stay. So, I worked out a plan to leave, and Compass Commercial was born.
What’s In A Name?
When you learn how to start a new business, one of the most important things to know is how to choose a name. Finding a name for your business can be tricky. I didn’t want to use my last name, so I went searching for a viable name. While this might seem like a relatively simple step, there is more to it than most people imagine. Start by thinking about the type of firm you want and how you want it to be perceived. A last name might work, but it doesn’t really tell a prospective client what you do for a living. In commercial real estate, cold calling is a big part of what we do. I didn’t want to call and say, “Hi, this is Lynn Drake of Drake Commercial Services.” That sounds like a one-woman band. Additionally, part of my reason for starting the business was to be able to sell it when I retire; thus, I felt that I needed to find something other than my last name.
Ask Your Friends!
I talked with friends and looked at the names of other businesses in my industry. My then-future husband had started his career in surveying, so we started playing with names and came up with Compass. Then, I was reading Oprah’s magazine and saw a page with the most beautiful compass I’ve ever seen. The next step was to see if there were any other Compass Real Estate companies out there. There was one, but since they were on the other side of the US, I didn’t think it would be an issue. Next, I researched the name to see if anyone had it trademarked. I came up with about 10 possible names before tackling the challenging task of purchasing a domain. Finally, I found a .com domain, and off we went.
Government and Banks
Once we had the name, we needed to register the business with the State of Michigan. I didn’t realize how easy this was, so I hired an attorney to register the business, obtain a federal ID number, and prepare Articles of Operation.
Once you have your federal ID number, it’s time to go to the bank, open a checking account, and apply for a loan. When I opened Compass in 2010, the economy was not doing well. I needed about $50,000 to start the business. I started with my own money, a loan from my sister, and a small business loan of $30,000. At this time, the banks weren’t loaning anyone money, particularly a single mother in the commercial real estate business; however, the Small Business Association looked at my excellent credit and immediately gave me a loan.
I was able to pay off this loan early, and since then, I’ve never had any issues getting loans for the business.
Got Money, Now What?
When I worked for Kelly Services as the Head of Real Estate, we had an ISO process that each department was required to complete. I recall thinking that this was a huge waste of time. Part of the requirement was to create a process documenting every step of all the processes in my department. The goal was to find where things fell through the cracks and then fix them. It turned out to be a great learning experience, as I was then able to set up processes that improved our department. My department received the highest level of accomplishment in this area. As I imagined how my new business would work, the memory of this training came to mind. Thus, before anyone was hired, I put together the processes to run the business. This facilitated a much smoother start.
Running a business is a lot of work. When just getting off the ground, the owner must wear many hats. It was clear that in order for me to continue assisting my existing clients I couldn’t go it alone, so the next questions I asked were how many people could I hire and where would we work?
Finding a place to operate the business
As a commercial realtor, this should be easy right? Finding the space wasn’t an issue, but my limited budget was. As a single mom in 2010, with one child and a big house to pay for, it was easy to imagine the vacant bedrooms as offices. Since I didn’t want to look like a business operating out of my house, I rented a Post Office Box out of the United Parcel office, which provided a real address. Rather than state that I was using a PO Box, we called it a suite, and no one caught on. Today, this is much easier, as there are many places that will lease you a single office, where you can put as many people as you want in a room. To learn how to find your first office, please read my book, Do You Speak Lease, or contact us at email@example.com for help finding your own executive suite.
I had enough money to hire one part–time person when I first started. I placed ads on national staffing sites, and since the economy was struggling and many people were looking for work, I received a large number of possible applicants. It didn’t take too long to find my first staff member. She had significant experience and ended up staying with Compass for many years. With a staff person comes the dreaded payroll. I had an undergraduate degree in accounting and knew I had no interest in preparing payroll every other week. After looking around, I decided to use a staffing firm. All I had to do was sign off on her hours every week, and the staffing company did the rest. In fact, they even paid her for holidays, etc. as part of the package. This was a great relief to me.
Setting Up Email
Personally, I won’t hire someone who uses a personal email account to manage their business email. To me, that says that they aren’t really serious about their business. What happens when the business grows to 10 people? Will all team members have their own email? If someone leaves the business, what happens to their email account? You don’t ever want to change your email address if you can help it. Look professional. Have your own business email address. Think ahead: How will your team name their emails? Will you use initials, first and last names, etc.? I strongly suggest getting an email address with firstname.lastname@example.org for your assistant. This will save you loads of time, particularly since turnover is so high these days.
Seek Professional Mentoring
There is a lot of free help out there to help you grow your business. Many counties and states have departments geared toward helping startups. Most of the help is free or available for a small cost. Google “help with small business,” and you will soon find lots of options.
Most people starting a business just think about understanding their trade. It is so much more than that! It can be overwhelming. You need to be able to keep the books, pay your taxes, market the business, meet with clients, and the list can go on and on. Classes on entrepreneurship can help teach you how to go about running a business.
Tracking All of the Costs Associated with a Bookkeeper
Most people don’t realize that I started working as a bookkeeper for a small company at the age of 16, so I had a huge advantage. If you are a startup and don’t know how to do this, take a class. Look online, and you should be able to find one quickly. Once the business is bringing in money, I strongly suggest hiring a bookkeeper because that is who will keep you on track. I’ve had several over the years. Eventually, I decided to use my CPA’s bookkeeping services because I didn’t have to manage their person, and it saved me money when my taxes were done each year because my CPA had reviewed the files every month.
You have a great product, so now what?
Marketing and selling is key to every business. Here are some things to consider: Who is your ideal client? How can you reach that ideal client? Who can introduce you to this client? Have you listed your business on Google, Facebook, LinkedIn, or any of the other sites that help you connect with potential clients? There are literally thousands of ideas on how to market a business available via videos on YouTube. Be careful with your time as you start exploring how to market, as there are really an unbelievable number of choices for marketing your firm.
A few years ago, I learned about an online program called Fiverr. It allows one to post a project and then have people bid on doing the work. I hadn’t realized how much I depend on this tool until I went back recently to find someone who I used a few years ago and saw how many projects were completed through this group. There are all kinds of programs like this, so look around and find one that works for you.
Surround Yourself with Like-Minded People
Unless your current friends own businesses, you will get a lot of flak from them about owning your own business. Friends like their friends to be like them. They may worry about your ability to pay your bills or balance your life. Don’t let their good intentions hold you back! Find new friends who also own businesses. They can help guide you.
People often say that it is safer to have a job than to own a business. I strongly disagree with this statement. Just like any other business owner, I’ve had ups and downs in my business, but, ultimately, I get to decide how much to charge and who to work with. Corporations don’t offer long–term commitments, while the life of owning a business is rewarding. Follow your dreams, not what others believe your dreams should be.
What’s Holding You Back?
You now know how to start a new business. So, get out there and create your dreams!